San Francisco Real Estate - Residential

Defining "good rental property" in San Francisco

A reader asks:

In San Francisco, what makes a good rental property investment? I know rent control has taken away some of the market, but are there other properties I could buy that would make sense as an investor?

Reply:

My opinion is that if you do not want to deal with rent control, buy properties that were built after 1978 because they are exempt from rent control. In San Francisco, an investor typically does not make money from monthly cash flow but from appreciation (except maybe in an all cash situation). So you would have to subsidize the properties while you own them, but more than make up for it in appreciation when you sell.

Or you could sell them "differently" than how you bought them. For instance-- you buy a 6 unit building that is in disrepair and when you are able to get the units vacant, you remodel them so you can then sell them as TIC's. In this instance the individual units are much more valuable than the building as a whole.

But it is very difficult to make "income" property in San Francisco make sense especially with rent control and the high price of property.

- Janis Stone

posted by SFResidence.com @ 2:29 PM